Kennametal Inc. has signed a definitive agreement to acquire the Tungsten Materials Business of Allegheny Technologies Incorporated for $605 million. ATI’s Tungsten Materials Business, with approximately $340 million in annual sales, is a producer of tungsten metallurgical powders, as well as tooling technologies and components. The business has approximately 1,175 employees across 14 operating facilities globally and consists of two divisions: ATI Firth Sterling and ATI Stellram. The transaction has been approved by both companies’ boards of directors and is expected to close before the end of the calendar year, subject to customary regulatory approvals and closing conditions.

The acquisition accelerates Kennametal’s plans to expand capacity and develop an advanced tungsten carbide recycling facility in the U.S. The company also estimates that this will reduce planned capital expenditures by approximately $30 million to $35 million and expects to achieve economy of scale 6 to 8 years earlier than prior projections.

In addition, the acquisition will further augment Kennametal’s tooling portfolio in the areas of metal cutting and metal finishing technologies, through brands such as Stellram Products, Garryson Products and Landis Products.

The company forecasts potential annual run-rate cost synergies ranging from $30 million to $40 million, which it anticipates will be realized via productivity improvements, operational efficiencies and raw-material cost benefits.